Fixed energy tariffs explained

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What is an energy tariff?
What's a fixed energy tariff (Plus pros and cons)
What's a variable energy tariff (plus pros and cons)
What's the standard variable tariff?
Unlimited Energy vs. Capped energy

There are two main types of energy tariffs:

Fixed rate: Your price per unit and standing charge are fixed for a certain amount of time
Variable rate: Your price per unit and standing charge change in line with the Energy Price Cap.

Here's what you need to know about fixed energy tariffs, how they compare with variable tariffs, and what to check before you decide.

What is an energy tariff?

An energy tariff sets the price you pay your energy supplier for gas and electricity.

Whether you choose fixed or variable will depend on two things:

How much certainty you want over the price you pay per unit
How much flexibility you want to switch deals or suppliers

The Energy Price Cap limits the maximum unit rates and standing charges suppliers can charge on those default tariffs.

The Energy Price Cap limits the maximum unit rates and standing charges suppliers can charge on standard variable tariffs. It doesn't limit your overall bill, as you'll still pay for the energy you use.

Unlimited Energy works differently. With an Unlimited Energy package, your monthly payment stays the same, even if your energy usage changes. If you're on a variable Unlimited Energy tariff, your monthly payment may change when the Energy Price Cap changes, but it won't increase because you use more energy.

Ofgem reviews the Energy Price Cap every quarter so that prices can change multiple times throughout the year.

Visit our Energy Price Cap page to see the current rates.

What is a fixed energy tariff?

A fixed rate tariff locks in the unit rate (the price per kWh) and the standing charge (the daily fee) for the length of your contract. If the energy price cap changes while you're mid-contract, your contracted rates won’t change with it.

Note:

If you have a traditional energy deal, a fixed rate only caps what you pay per unit (kWh), not the total you’ll pay during your contract.

Usually, your monthly bill covers a set amount of energy usage, and you’ll be charged or rebated at the end of your contract if you’ve used more/less energy than you’ve paid for.
If you choose to pay for what you use each month, your price will fluctuate with your usage. Either way, the way you’re charged per kWh won’t change.

If you have an Unlimited Energy deal, your monthly payment is the total you’ll pay for energy during your contract and your payments won’t be affected by the energy price cap.

Here's a quick example of how it works in practice:

Tom is on a fixed tariff for electricity. His unit rate and standing charge are locked in for 12 months. When Ofgem announces a cap rise, Tom's rates don't change. His bill only moves if his usage does.

It's also worth knowing that fixed tariffs sit outside the price cap. Ofgem's cap applies to default (standard variable) tariffs, so suppliers price fixed deals independently. That's why fixed deals often differ from the price cap rate.

Get a quote for a fixed price bills package

What are the benefits of a fixed energy tariff?

A fixed energy tariff gives you more certainty over your energy costs. Here are some of the main benefits:

Easier budgeting: Your unit rates stay the same throughout your contract, making your energy costs more predictable.
Protection from price rises: Even if the Energy Price Cap increases during your fixed term, your rates won't change until your contract ends and your monthly payment stays the same.
Some fixed deals can cost less. Depending on energy market conditions, fixed tariffs can sometimes be cheaper than standard variable tariffs. Whether you'll save depends on where you live, how much energy you use, your meter type, and how you pay.
Great for high-energy users: If you use a lot of energy, locking in a lower unit rate can make a bigger difference to your annual bills. For even more predictable bills, you can get a fixed-rate Unlimited Energy package.

What are the downsides of a fixed energy tariff?

Fixed energy tariffs aren’t for everyone; here are some factors to consider:

Potential lost savings: If wholesale prices fall and the cap drops, you'll stay on your agreed rate until the contract ends, so you could end up paying more than someone on a variable tariff.
Exit fees usually apply: Most fixed tariffs charge an exit fee if you leave early. Around 80% of fixed rate tariffs on the market carry exit fees. Fees are typically charged per fuel, so on a dual-fuel contract, you'd pay separately for gas and electricity. ScottishPower, for example, charges £50 per fuel for early leavers. Some tariffs go even higher, up to £75 per fuel on certain 12-month deals.
It's not always the cheapest option: During the peak of the energy crisis, fixed deals were often priced well above the price cap, meaning customers who fixed paid more than those who stayed on the standard variable tariff.

What is a variable energy tariff?

On a standard variable tariff (SVT), your unit rates and standing charge can change when Ofgem updates the price cap. The cap is reviewed every three months (January, April, July and October). When the cap moves, your rates typically change on the same date.

Here's a quick example:

Nina is on a standard variable tariff. When Ofgem raises the cap on 1 July, her unit rate and standing charge go up from that date. Her bill increases even if she uses exactly the same amount of energy as before.

What are the benefits of a variable energy tariff?

A variable energy tariff offers more flexibility than a fixed tariff. Here are some of the main benefits:

No exit fees. Standard variable tariffs don't usually charge an exit fee, so you can switch supplier or tariff whenever you like.
You could benefit from lower prices. If the Energy Price Cap falls, your unit rates are likely to reduce at the next price cap update.
Freedom to switch. Because you're not tied into a fixed term contract, you can move to a new tariff whenever you find a better deal.

What are the downsides of a variable energy tariff?

There are a few things to keep in mind when it comes to variable tariffs:

Your bills can increase: If the Energy Price Cap rises, your unit rates and standing charges may also increase, even if your energy usage stays the same.
It's harder to budget: Because prices can change every three months, your energy bills are less predictable.
Prices aren't guaranteed to be the lowest: The Energy Price Cap sets the maximum suppliers can charge, but they can choose to charge less. That means the best deal isn't always a standard variable tariff.

What's the standard variable tariff?

The SVT is the default tariff. If you don’t choose a specific tariff, or your fixed deal ends, this is the tariff you end up with.

Ofgem reviews and sets the price cap every three months. The cap limits the maximum unit rate and daily standing charge suppliers can charge on default tariffs. It doesn't cap your total bill, because that still depends on how much energy you use.

For the current figures, visit our Energy Price Cap page.

Your actual rates will differ depending on where you live and whether you pay by Direct Debit, standard credit or prepayment meter. Standing charges vary by region because they reflect local network costs, population density and average usage in your area.

Ofgem now publishes two "typical annual bill” figures. One uses the older consumption assumptions, while the other uses updated benchmarks. The difference isn't because energy prices have fallen; it’s because the newer figure assumes a household is using less energy.

Your own energy bill won't change because Ofgem updated these benchmarks. You'll still pay based on your actual energy usage and the tariff you're on.

Why do energy prices affect which tariffs are available?

Wholesale energy costs make up around 40% of a typical energy bill. The rest of your bill pays for network charges, policy costs, taxes and supplier operating costs. When wholesale prices change, they eventually feed through to what consumers pay.

The July 2026 price cap increase was caused by higher wholesale gas prices and ongoing volatility in global energy markets. Fixed tariffs are being priced with this market in mind.

What type of energy deals are best for me?

There's no single right answer to this question as it depends on your priorities. Here's a practical way to think about it.

A fixed tariff may suit you if:

You want certainty over your unit rate, i.e. the price you pay for energy, for the next 12 months or more.
You use a medium or high amount of energy, so a lower unit rate makes a meaningful difference.
You can find a deal that beats the cap after accounting for any exit fees.
You're happy to commit to a contract term.

A variable tariff may suit you if:

You want the flexibility to switch whenever a better deal appears.
You think the cap could fall before your next review and want to benefit automatically.
You're planning to move home soon and don't want to deal with contract portability.

Get a quote from One Utility Bill, and choose between a fixed or variable tariff

What should you check before choosing a fixed energy tariff?

Before you commit to a fixed deal, run through these checks:

Compare the full tariff, not just the headline rate: Standing charges vary by region and can make a big difference to your annual cost. Always compare against the current cap rates for your region, not the UK average.
Check the exit fee, and whether it's per fuel: Most fixed tariffs charge exit fees per fuel, so a dual-fuel contract could mean two separate charges if you leave early. Factor that into your saving calculation before switching.
Note your contract end date: If you have 50 days or more left on a current fixed deal, you may need to pay an exit fee to leave it.
Check payment method and meter requirements: Some fixed tariffs require a smart meter, a specific payment method, or other conditions to unlock the advertised rate.
Think about practicalities if you need to move home: If you're planning to move, check whether the tariff can transfer to your new address. If it can't, you may face an exit fee.

It's always worth comparing live tariffs using your postcode and actual energy usage.

What happens when your fixed tariff ends?

If you don't take any action when your fixed deal expires, your supplier will usually roll you onto their cheapest variable tariff automatically.

Your supplier must warn you before this happens. Under Ofgem's licence conditions, suppliers need to contact you between 42 and 49 days before your fixed deal ends, telling you what will happen if you do nothing and reminding you that you can switch without being charged an exit fee in that window.

That last point is important: you can switch supplier or tariff in the 49 days before your contract ends without paying an exit fee. So if you spot a better deal as your fix approaches its end date, you don't need to wait for the contract to expire before acting.

Unlimited Energy vs capped energy

You’ve got two options for the energy in a One Utility Bill package, separate from the fixed-versus-variable tariff question.

An Unlimited Energy package means you pay the same amount every month and can use as much gas and electricity as you need, with no bills at the end of your contract, or sudden payment increases for overuse. If you've ever had a mobile contract with unlimited data, it’s the same idea. You choose either a fixed or variable tariff for your Unlimited Energy service, depending on whether you want a locked rate or a rolling contract.

A capped energy package is the standard deal you'll find with most energy suppliers. Your monthly Direct Debit is based on an estimate of your typical usage. If your meter readings show you've used more than estimated, you'll either pay the difference at the end of your contract or see your monthly payments increase.

Note: This is a different concept from Ofgem's price cap; "capped" here refers to the amount of energy you can use over your contract for the price, not a limit on unit rates.

Get a fixed price Unlimited Energy quote

Should you fix now?

But whether fixing makes sense for you depends on your situation. How much you could save varies by region, usage, meter type and payment method, and average use figures are based on typical consumption and won't apply to every household. If prices decrease later, a fixed deal could be more expensive than a variable rate..

Before choosing a tariff, compare the unit rate, standing charge, contract length, and any exit fees to make sure it's the right deal for you.

Get a quote from One Utility Bill

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